DALLAS — With some 20,000 troops set to relocate to Fort Bliss in the next few years, El Paso is taking steps to assure it’s ready for the influx.
The West Texas border town plans to sell $75 million of general obligation debt in two tranches today. The growing city will offer $40 million of general obligation bonds and $35 million of combination tax and revenue certificates of obligation.
“There are parts of about four different authorizations coming together here,” said Bill Studer, deputy city manager for financial and administrative services. “Most of the proceeds will go to improvements of streets and drainage, but there’s a bunch of other projects in there as well.”
Following this week’s sale, the city has about $56.7 million of authorized but unissued debt, which it plans to exhaust within the next seven to 10 years. El Paso also expects to issue about $110 million of pension obligation bonds within the next three months.
Unlike much of the Lone Star state, El Paso won’t be voting on any bond packages this Saturday.
Some proceeds from the bonds will fund upgrades to the city zoo, libraries, streets, and fire stations. Funds from the certificates will provide for new streets and traffic signs, as well as improvements to flood control, storm water, and drainage systems. The debt, which is expected to be insured, is structured as serials with final maturity in 2032.
The bonds and certificates are secured by an ad valorem tax of $2.50 per $100 of taxable assessed value, and the certificates are further backed by a limited pledge of surplus revenue from the waterworks and sewer system.
The syndicate for the negotiated sale includes Bear, Stearns & Co., Wells Fargo Brokerage Services LLC, and Merrill Lynch & Co.
First Southwest Co. is the financial adviser to the city, and Delgado, Acosta, Braden & Jones PC and Escamilla & Poneck Inc. serve as co-bond counsel.
El Paso is now home to about 665,000, which is up 18% from the 2000 census figure of 563,662. More than 1.2 million people live across the Rio Grande in Ciudad Juarez, Mexico.
El Paso is set to see a huge influx of new residents in the coming years, as Fort Bliss is expected to receive more troops as part of the federal government’s Base Realignment and Closure initiative.
Some estimates have about 21,000 troops with another 25,000 family members relocating to the Army base over the next five years or so.
Fitch Ratings assigned a AA-minus rating and Standard & Poor’s assigned a AA rating to the sale. Moody’s Investors Service doesn’t rate the city’s credit.
Fitch analysts said a recent change to the city manager form of government streamlined operations and provided greater cost controls, enabling the city to balance the budget for the first time in a decade.
Analysts said the strong rating also reflects a satisfactory financial position, moderate debt position, with a large and diverse tax base. The city’s tax base is starting to grow beyond the typically modest rates of the past, according to Fitch, increasing by more than $1 billion each of the last three fiscal years to about $24 billion now.
Standard & Poor’s analysts said the rating reflects an “increasingly diversified economy,” the city’s “preeminence as a regional economic center due to its strong access to international trade” and strong finances.
